Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
All the four appeals of the Revenue are directed against the
common order passed by the Commissioner of Income Tax
(Appeals) -19, Chennai, dated 01.05.2017 pertaining to assessment
years 2005-06, 2008-09, 2009-10 and 2010-11. Since common
issue arises for consideration in all these appeals, we heard these
appeals together and disposing of the same by this common order.
2 I.T.A. Nos.1939 to 1942/Chny/17
The only issue arises for consideration in these appeals is charging of interest under Section 234B(3) of the Income-tax Act, 1961 (in short 'the Act').
Smt. Ruby George, the Ld. Departmental Representative, submitted that the Assessing Officer originally charged interest under Section 234B(1) of the Act instead of Section 234B(3) of the
Act. Subsequently, by an order under Section 154 of the Act, according to the Ld. D.R., the Assessing Officer rectified the same and levied interest under Section 234B(3) of the Act. On appeal by the assessee, the CIT(Appeals) found that interest under Section
234B of the Act is chargeable on the returned income from first day of the assessment year till the date of order under Section 143(1) of the Act, therefore, the assessee is liable for interest under Section
234B on the assessed income over and above the returned income from the date of intimation under Section 143(1) of the Act till the date of assessment under Section 153A of the Act. Referring to the
Section 234B of the Act, the Ld. D.R. submitted that where there was no assessment order, the order passed under Section 153A of the Act shall be regarded as regular assessment for the purpose of
levying interest under Section 234B of the Act. Therefore,
3 I.T.A. Nos.1939 to 1942/Chny/17
according to the Ld. D.R., the interest shall be calculated on the
amount on which the interest was payable in respect of shortfall in payment of advance tax to be increased and the assessee shall be liable to pay simple interest at the rate of 1% for every month or part
of a month comprised in the period commencing on first day of April next following such financial year and ending on the date of assessment under Section 153A of the Act. Since the assessment
made under Section 153A of the Act is a regular assessment, according to the Ld. D.R., the CIT(Appeals) is not justified in deleting the interest levied by the Assessing Officer.
On the contrary, Shri Y. Sridhar, the Ld. representative for the assessee, submitted that the assessee filed the return in the regular course and the same was processed under Section 143(1)
of the Act and intimation was also issued. Subsequently, according to the Ld. representative, there was a search in the premises of the assessee on 16.01.2011. Followed by the search, the assessment
was framed under Section 153A of the Act. According to the Ld. representative, the Assessing Officer calculated interest under Section 234B(3) of the Act. Subsequently, the Assessing Officer initiated rectification proceeding under Section 154 of the Act and
4 I.T.A. Nos.1939 to 1942/Chny/17
charged interest under Section 234B(1) of the Act. According to the
Ld. representative, the assessee challenged the order before the CIT(Appeals) contending that the rectification order passed by the Assessing Officer under Section 154 of the Act is not justified.
According to the Ld. representative, under Section 234B(1) of the Act, when the assessee fails to pay advance tax is liable for simple interest 1% for every month or part of the month till the
determination of total income under Section 143(1) of the Act where a regular assessment was made till the date of such regular assessment on the amount equal to the assessed tax. According to the Ld. representative, Section 234B of the Act provides for levy of
interest on the income assessed over and above the returned income. According to the Ld. representative, the interest chargeable and the addition made by the Assessing Officer is till the
date of assessment made under Section 153A of the Act and this view of the CIT(Appeals) was supported by the decision of Hyderabad Bench of this Tribunal in MBG Commodities Pvt. Ltd.
(77 taxmann.com 353). Therefore, according to the Ld. representative, the CIT(Appeals) has rightly found that the assessee is liable for interest under Section 234B of the Act on the assessed
income over and above the returned income from the date of 143(1)
5 I.T.A. Nos.1939 to 1942/Chny/17
order till the date of assessment made under Section 153A of the
Act. Hence, according to the Ld. representative, the CIT(Appeals) has rightly set aside the order passed by the Assessing Officer under Section 154 of the Act.
We have considered the rival submissions on either side and perused the relevant material available on record. The only issue arises for consideration is levy of interest under Section 234B of the
Act. The Assessing Officer while completing assessment under Section 153A of the Act levied interest under Section 234B(1) of the Act. Subsequently, by an order under Section 154 of the Act, he
levied interest under Section 234B(3) of the Act. The CIT(Appeals) found that interest under Section 234B of the Act has to be charged till the date of intimation under Section 143(1) of the Act.
Subsequently, the assessee is liable for interest under Section 234B of the Act on the assessed income over and above the returned income from the date of Section 143(1) of the Act till the date of
assessment order.
We have carefully gone through the provisions of Section 234B of the Act, which reads as follows:-
6 I.T.A. Nos.1939 to 1942/Chny/17
Interest for defaults in payment of advance tax. 234B. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent. of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent. for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. Explanation 1.— In this section, “assessed tax” means the tax on the total income determined under sub-section (1) of section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount of,— (i) any tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income ; (ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India ; (iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section ; (iv) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India ; and
7 I.T.A. Nos.1939 to 1942/Chny/17
(v) any tax credit allowed to be set off in accordance with the provisions of section 115JAA or section 115JD. Explanation 2.— Where in relation to an assessment year, an assessment is made for the first time under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 3.— In Explanation 1 and in sub-section (3), “tax on the total income determined under sub-section (1) of section 143” shall not include the additional income-tax, if any, payable under section 143. (2) Where, before the date of determination of total income under sub-section (1) of section 143 or completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,— (i) interest shall be calculated in accordance with the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section ; (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. (2A) (a) where an application under sub-section (1) of section 245C for any assessment year has been made, the assessee shall be liable to pay simple interest at the rate of one per cent. for every month or part of a month comprised in the period commencing on the 1st day of April of such assessment year and ending on the date of making such application, on the additional amount of income-tax referred to in that sub- section ; (b) where as a result of an order of the Settlement Commission under sub-section (4) of section 245D for any assessment year, the amount of total income disclosed in the application under sub-section (1) of section 245C is increased,
8 I.T.A. Nos.1939 to 1942/Chny/17
the assessee shall be liable to pay simple interest at the rate of one per cent. for every month or part of a month comprised in the period commencing on the 1st day of April of such assessment year and ending on the date of such order, on the amount by which the tax on the total income determined on the basis of such order exceeds the tax on the total income disclosed in the application filed under sub- section (1) of section 245C ; (c) where, as a result of an order under sub-section (6B) of section 245D, the amount on which interest was payable under clause (b) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly. (3) Where, as a result of an order of reassessment or recomputation under section 147 or section 153A, the amount on which interest was payable in respect of shortfall in payment of advance tax for any financial year under sub- section (1) is increased, the assessee shall be liable to pay simple interest at the rate of one per cent. for every month or part of a month comprised in the period commencing on the 1st day of April next following such financial year and ending on the date of the reassessment or recomputation under section 147 or section 153A, on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the basis of the regular assessment as referred to in sub- section (1), as the case may be. (4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub- section (1) or sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and—
9 I.T.A. Nos.1939 to 1942/Chny/17
(i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly ; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years.
The question arises for consideration is whether the levy of
interest under Section 234B(1) or 234(3) of the Act can be a subject
matter of proceeding in Section 154 of the Act? It is obvious that
Section 154 of the Act is to rectify an error which is on the face of
the record. Whether Section 234B(1) applies or 234B(3) applies
needs an interpretation. Therefore, this Tribunal is of the
considered opinion that this is beyond the scope of proceeding
under Section 154 of the Act. As observed earlier, the proceeding
under Section 154 of the Act is only to rectify an error which is
apparent on the face of record. Therefore, interpretation of the
provisions of the Act, which is a debatable one, cannot be subject
matter of proceeding under Section 154 of the Act. Hence, this
Tribunal do not find any reason to interfere with the order of the
lower authority and accordingly the same is confirmed.
10 I.T.A. Nos.1939 to 1942/Chny/17
In the result, all the appeals of the Revenue stand dismissed.
Order pronounced on 31st May, 2018 at Chennai.
sd/- sd/- (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) (A. Mohan Alankamony) (N.R.S. Ganesan) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member चे�नई/Chennai, �दनांक/Dated, the 31st May, 2018. Kri. आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-19, Chennai-34 5. �वभागीय ��त�न�ध/DR 4. Principal CIT, Central-2, Chennai. 6. गाड� फाईल/GF.